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Royal Credit Union to Purchase Capital Bank

Credit Union Times (April 28, 2016) - The $1.7 billion Royal Credit Union said Wednesday it signed a definitive agreement to buy Capital Bank in St. Paul, Minn.

This is the second definitive agreement this year of a credit union announcing a bank purchase.

In February, the $1.1 billion Advia Credit Union in Parchment, Mich., said it will acquire the $83.3 million Mid America Bank in Janesville, Wis.

Under the terms of the Royal-Capital Bank agreement, the Eau Claire, Wis.-based cooperative will assume approximately $35 million of the bank’s assets. Pending customary closing conditions, including state and federal regulatory approval, the completion of the transaction is expected to occur in the second half of the year.

According to the Federal Deposit Insurance Corporation, Capital Bank posted a net income of $204,000 at the end of last year with a return on assets of 0.57% and return on equity of 4.38%. The bank’s equity capital totaled $4.7 million at the end of 2015.

Royal said the acquisition will provide office accessibility and additional services for its Minnesota members.

Capital Bank opened in 1956 and was originally chartered by business owners on Rice Street on St. Paul’s north end. The bank has maintained its community bank image, continuing to serve many of its original customers who grew up in the neighborhood and own businesses in the area, according to Royal.

The Advia purchase of Mid America Bank and its four branches in south central Wisconsin is expected to close in the second or third quarter.

Founded in 1910, Mid America Bank posted a net loss of $34,000 at the end of 2015 with a return on assets of -0.04% and a return on equity of -0.36%, according to the FDIC. The bank’s equity capital totaled $9.4 million at the end of last year.

In another credit union bank acquisition, the purchase of the $112 million American Bank in Huntsville, Ala., by the $645 million Avadian Credit Union in Birmingham, Ala., is expected to be completed on April 30, according to a March 25 letter to American Bank customers.

The deal was originally announced in August 2015.

Avadian will assume operations of the bank’s sole branch, which will expand the cooperative’s market presence in Huntsville.

According to the FDIC, American Bank recorded a net income loss of $1.5 million at the end of 2015 with a -1.27% return on assets and -15.36% return on equity. The bank’s equity capital was $9.1 million at the end of last year.